Sanjiv Bhaskar, Vice President of Research – Chemicals, Materials & Nutrition, Frost & Sullivan – North America, opines that once Indian companies get in sync with standards and pricing, medical and industrial PPE is a fairly lucrative and stable market. Moreover, entering this segment opens up new opportunities in fields like workwear for industrial and rental businesses.
IBT: What is your perspective on how the global PPE market has shaped over the years, and particularly in the post-COVID period?
Sanjiv Bhaskar: PPE is a broad subject and it has a huge market globally. But of late it has come to the forefront because of the COVID-19 pandemic. Suddenly, there is a spike in demand from the healthcare industry. Typically, there need to be stockpiles, which should take care of such spikes in demand. In most countries, those stockpiles were woefully low, leading to tremendous shortages.
A large percentage of PPE products are produced in China, which also became a major consumer of PPE at the beginning of the COVID-19 pandemic. The government was not allowing export of PPE. In fact, China also imported some PPE like N95 respirators to meet its demand. .
Most countries in Europe and Americas are dependent on imports from China and other Asian countries for a variety of PPE products. Large players like 3M and Honeywell have enhanced their capacities for products like N95 masks to meet the spike in demand and fill in the supply gap.
IBT: Which products offer scope for Indian companies that want to play in this market? What are the major operational adjustments that a typical apparel manufacturer needs to make to pivot to become a supplier of PPE?
Sanjiv Bhaskar: Primarily there are four products used in the healthcare industry – disposable gloves, disposable masks (surgical and N-95s), disposable face shields and gowns & coveralls. Around 70-80% of the gloves are made in Malaysia. It is a difficult category to enter as the production lines are expensive and take a long time to set up. These also need ecosystem of raw material, which is not easy to replicate. Hence, gloves are not an easy option. Both surgical gloves and examination gloves are a long term project.
If you have the machine and equipment, both surgical and N-95 masks can be manufactured as they are a fairly automated processes. Even face shields are fairly simple products, so it should not be an issue.
In terms of gowns and coveralls, a lot of companies are working on that and they have installed additional capacity, though I am not fully aware about the Indian manufacturing scenario. Gowns are of two types – surgical gowns and isolation gowns. Surgical gowns are more challenging to supply as FDA approval is required for the product and the manufacturing facility. These also have to be aseptically packaged or sterile and must follow strict FDA guidelines. The isolation gowns are simpler to cater to and the requirements are not that stringent.
Production of coveralls is a little labour intensive, so India is well placed to manufacture them. They require additional equipment like hot air seam sealing machines, but these are not very difficult to get.
IBT: What are the key requirements to be internationally competitive in this market?
Sanjiv Bhaskar: I have heard that India has created some good capacity in terms of production. But it remains to be seen whether Indian PPE meets the quality requirements of US market. Being internationally competitive requires adhering to quality standards on a consistent basis. Besides quality and process control, you also have to be price competitive, must have a stable raw material supply chain, and your products have to meet local standards that are different in different countries. This may also need third party inspection and random sampling if the buyers specify.
FDA requirement has been waived by recent Emergency Use Authorisation (EUA) in the US. So non-FDA approved masks are currently allowed to be used there. These products have to be at least NIOSH approved for industrial applications.
IBT: How do you view India’s prospects in light of the global obsession with reducing dependence on imports from China? How are US companies viewing India as a manufacturing destination from your conversations?
Sanjiv Bhaskar: Almost every country is looking at an alternative to China. So this is the golden opportunity for India to become a exporter of PPE. Companies in the US and Europe would require quality, reliability, price competitiveness from their suppliers. In these markets, companies don’t know much about India’s manufacturing capabilities. So this would need a big push from the industry and government agencies to promote India as a favourable and reliable partner.
IBT: Once Indian companies start getting into medical PPEs, what key sectoral opportunities can open up for them?
Sanjiv Bhaskar: Absolutely, that is a key takeaway for Indian companies planning to throw their hat into the ring. There are 7-8 broad product categories for PPE. It’s called head-to-toe protection – starting from head, helmets, eyewear, hearing protection, respiratory protection, gloves, body protection, safety shoes for foot protection, etc. Globally, the market for PPE is in the region of about US$ 50 billion. In 2020, the market for PPE in is expected to be in the region of US$ 58-60 billion. North America is probably around 25% of that.
So the opportunity is pretty big. Apart from this, workwear offers an additional opportunity of US$ 10-12 billion. Large apparel manufacturers can actually diversify into workwear, protective clothing quite easily. These markets are lucrative and very consistent. They do not go down and are less fashion sensitive, though quality standards and pricing become critically important. Once you get into the groove it’s a good opportunity for diversification.
Sanjiv Bhaskar is the Vice President of Research – Chemicals, Materials & Nutrition, Frost & Sullivan – North America, and is based in San Antonio, USA. He has over 20 years of consulting experience in Personal Protective Equipment (PPE), Building Automation, Industrial Automation, and Environmental Industries. His key areas of expertise are Mergers and Acquisition target research and due diligence; Geographical expansion strategy; Market entry and expansion strategies; New product development and launch strategies; Customer based market-competitive strategies, repositioning strategies and innovative distribution concepts.
